your thoughts on the air as well about this. our question of the day. we wanted to ask you what you think did know and here are some of your responses this morning. >> bill says on our blog i believe he did know. he was a mentor to the main players and created a culture within his empire so he is responsible and therefore accountable. >> julie says the hacking scandal is only making public knowledge. news of the world has been under scrutiny of hacking for decades. the buck stops with murdoch. we welcome your comments. we be back here bright and early tomorrow morning. "cnn newsroom" begins right now with kyra phillips. >> thanks so much. this hour in the room you're about to see, one of the world's most powerful media moguls faces an extraordinary grilling. rupert murdoch will come face-to-face with outraged

members of the britt parliament. they are supposed to hammer him and his allies on a empire destroying jobs and careers and now raising new questions about his company's conduct right here in the united states. bribery, hacking, corruption of power. lawmakers say the allegations are not about just sleazy journalism, about the power of an empire that has gone largely unchallenged, before now. it's 9:00 a.m. on the east coast and 6:00 a.m. on the west coast. thanks for joining us. here are other stories we will take a look. another step in the nation's debt crisis but not any closer to a final deal. the house will vote on a republican measure but the president says he won't even consider it. the government deadline remains august 2nd before it runs out of money. the space shuttle "atlantis" on its way home. this morning, it did undock from the international space station and began the final voyage in the program's 30-year-old history. now back to the murdoch

media scandal and the players who will appear before members of the british parliament morning. rupert murdoch, the 80-year-old billionaire who sits atop the news corporation empire. he has ruled with an iron fist but this deepening embarrassment reportedly has some board members questioning whether he should be replaced. then we have james murdoch, his son, long considered to be his heir apparent. he was once considered the family's black sheep will you steadily climbed to the number three spot in the company. and then there is rebekah brooks, a rupert murdoch protege. she was a top executive before she resigned on friday. she was arrested a couple of days later. let's get straight to london to atika shubert. these witnesses are not under subpoena. they don't have to say a word, do they? >> no.

they don't, but it's still a court and can be held in tempt of court for example. even though there is no particular oath here, there is an incredible amount of pressure on them to answer these questions. remember, particularly in the cases of james murdoch and rebekah brooks, they have told lawmakers in previous hearings the this was the end of it. it was a rogue reporter and a private investigator and that was the end of it. clearly, it was not. because it turns out that there are, in fact, thousands of phone mail messages that may have been hacked and now they are back in front of lawmakers again trying to explain why they didn't tell the full story the first time around. >> atika, we have been paying close attention to this since early this morning. you know parliament is very well known for its political theater. how many times have we taken sound bites from within parliament of the yelling and the heckling, the angry

outbursts? but what is interesting about this is we are probably not likely to see that type of behavior today, correct? >> that's right. it's a bit of a balance here, because there are two ongoing police investigations into the phone hackings and into police payments. both connected. now, because of those two investigations, both murdochs and rebekah brooks may be very limited in what they can say, especially rebekah brooks. remember, she was arrested on sunday so she doesn't want to say anything that might prejudice that ongoing investigation. >> schubert in london. $8 billion by many estimates. jeffrey mccrackin is a senior business writer with bloomberg

news and "businessweek" and joined us yesterday out of new york and joins us once again. jeffrey, i appreciate it. >> no problem. >> when we talk about rupert murdoch, he didn't amass his fortune without being very shrewd, very cunning. you know, has he grown to the point that he is virtually untouchable like many people have said? >> i would say it's very difficult, if you will, for him to be touched, for him to be dislodged from his own company. he and his family have roughly 38% voting stake so they can, obviously, block a lot of efforts or moves that can happen from the outside that agitated shareholders could try to force on him. but i would say one problem is he having now this has moved around the realm of political and a media issue into a serious financial situation. shareholders that were already a little concerned about the company and already felt like murdoch sometimes put his own

interests ahead of those as shareholders, those individuals are starting to pressure the board and i think the board itself is starting question murdoch's leadership and the leadership team around him. >> so it's possible that he could be replaced? >> oh, i think it's quite possible. you know, our reporting yesterday indicated that the board, especially independent members of the board, are considering whether it's getting to the point where they may need to replace rupert perhaps with someone like chase kerry as an interim ceo. this has a bit of a king lear element to it, if you will. there is such a family issue because he has sons on this and his daughter could be elevated to the board. i think you could get to a point where rupert feels like it may be best that he step aside perhaps to a chairman role or an executive chairman role and allow somebody else to step in for ceo and he takes the hit so james could take over the company. >> what are you going to be paying attention to? what are you wanting to hear?

what are you thinking murdoch will do here? as i pointed out at the beginning of the hour, it's possible that he could just say nothing. >> right. he could. i'm not sure that would be the best move. in the story we put out yesterday, we indicated two kind of key things. one is the board is considering whether they need a new chairman -- a chief executive. the other issue was there was a lot of concern inside news corporation and among its advisers about how rupert handles the prep yesterday, if you will, the prep for today's event. they felt like he was either evasive or defensivive. it didn't come across very well and came across as defensive and making a lot of excuses for the actions that had gone on at news corp instead of taking full responsibility. i think what people will want to see is that he understands the depth of the problem that he is giving a sense that of accountable, he is acknowledging the mistakes, and he is also kind of projecting where they are going to go from here and how they are actually going to fix this.

i think one problem for mr. murdoch and news corp in the past when they acquired the "wall street journal" they said we will set up an independent commission there. but it didn't turn out very well. so if he floats that notion yet again of an independent board or independent investigation, people are going to say, well, is this going to be the same somewhat superficial effort that went down when you acquired dow jones and the "wall street journal"? >> interesting. we were talking about the possibility that murdoch could be replaced on the board. apparently, a senior news corp official is coming forward and saying now, i don't know if you've seen this statement or not, quote, as you would expect, the board has had a plan in place for some time and it regularly re-evaluates those plans, suggestions that a plan is currently being accelerated or implemented are inaccurate. interesting. they are not coming forward and giving really a direct answer to what we were just discussing. they are just saying this plan,

whatever this plan is they are talking about, is not going to be accelerated or implemented at the moment. >> right. we stand by our reporting. we continue to believe what we said and what we reported as accurate. i do think what you've got going on is a private element and then a public theater. i think privately the board, as we have indicated and others have indicated, the board is nervous especially the independent board members and blown up in a couple of weeks in a way they didn't anticipate and a way the management didn't let the board know could occur. privately i think they are wondering what is the next step and whether rupert is, you know, the person to put their chips behind. i think publicly they have got to say what they have got to say which is we stand behind rupert. they can stand behind rupert and say he is only a chairman now so they can make comments like that or still anticipating or considering a change. >> got it. jeffrey mccrackin, you will stick bus the next 45 minutes or so? i have for almost an hour? >> i will stay around as long as

i can. thanks. >> fantastic. i appreciate you weighing in and being with us. thank you very much. stay with cnn for continuing coverage of the murdoch media scandal. we are going to go live to the hearing at the bottom of the hour. rupert murdoch and his son james are scheduled to begin their testimony at 9:30 eastern live on cnn. the deadline for a deal on raising the debt ceiling is now two weeks away. no official talks scheduled at this point but there could be a vote in the house today on the cut, cap, and balance act. on paper, it looks like it could be a pretty appealing piece of legislation promising to cut government spending and keeping it in check. why did the president threaten to break out the veto pen even prosecute it made it to the house? well, white house correspondent brianna keilar is joining me now. why does it have the president so riled up at this point. >> reporter: something

conservative republicans are rallying behind and include major spending cuts and cap federal spending at a certain amount, tying it to the gdp, saying it could only be 18% of the gdp right now. spending is about 24%. and a balanced budget amendment. a change to the constitution that would include more spending cuts and make it difficult to raise federal taxes. president obama issued a veto threat on this yesterday saying it would damage the economic recovery that there would be major cuts to the education system across the nation and that it would be very hurtful to entitlement programs that the elderly and the poor rely on. here is what jay carney said. >> what we are witnessing here with this measure is classic washington posturing kabuki theater. you know, this is a measure that is designed to duck, dodge and dismantle. duck responsibility, dodge

obligations and dismantle if enshrined into law which it will not be but it would eventually require the dismantle of our safety security net, social security, medicare and medicaid. >> reporter: jay carney there. house republicans say this is about showing the u.s. is serious about getting their fiscal house in order and that this is all about making sure that, you know, the economically the u.s. will be on firm footing for some time. i think even though there is this veto threat, kyra, from the white house, the hope here and among some democrats, is that a vote on this in the house and a vote in the senate would perhaps give some republicans political cover so they can say they push for something conservative and it gives them some cover perhaps to then ultimately vote to increase the debt ceiling. of course, house republicans have been pretty unbending on their demand so unclear if that is actually how this would play out. >> then the gang of six presentations of senators today. let's talk about what that is

about. >> reporter: this is a presentation coming from five members of the gang of six which were three republicans, three democratic senators who are trying to come to some sort of agreement presenting this to a smaller number, about 40, 50 senators and it's a plan, according to senator kent conrad, the chairman of the senate budget committee, that would include 3.6 or 3.7 trillion dollars in deficit savings over ten years. that's a pretty hefty plan. it also tackles entitlement reform. the bottom line, you want to know here about two weeks out from this august 2nd deadline for increasing the debt ceiling is this going to have any effects on the talks? the answer is it's really a little too laid late for it. the environment or the appetite for really doing something about that has been elusive. the president and republicans haven't been able to do that so this is something, i think, more forward looking than something that will affect the discussions going on right now. they are looking at a more modest plan. >> brianna keilar, thanks so

much. you would think as the deadline nears on a deal for the debt ceiling we would be saying no thanks? not necessarily. paul steinhauser with new poll numbers in washington. >> reporter: americans seem to be divided on the need to raise the debt ceiling by august 2 or not. four polls the last week, including two the last 24-hour show americans are split. take a look at this one from cbs news. on the left side right there you can see 46% say, yes, debt ceiling needs to be raises but 49% saying no. check the jump from early june to now saying, yes, the debt ceiling needs to be raised. of course, a partisan divide on that question with democrats saying raise the debt ceiling and republicans not so much. how about if an agreement should it include spending cuts or tax increases be included? republicans on the hill say no way to tax increases but three new polls the last week say, tax increases should be part of the deal. check this out from the same cbs

poll. interesting. as you would agree. imagine democrats 71% say yes it should include both spending cuts and tax increases and 68% for independents but look at that. 55% of republicans even 53% of self-described tea party members say, yes, some kind of tax increases should be part of any agreement to raise the debt ceiling. kyra? >> paul steinhauser, thanks so much. your next political update in an hour. always get all of the political news 24/7 at cnn/politics.com. east africa's worst drought in decades is helping spawn the world's biggest refugee camp with thousands of more people arriving every week desperate for food and water. the camp is in kenya and most of its refugees from somalia. zain verjee is joining us with more on this. good morning. >> reporter: good morning, kyra. this is the largest refugee camp in the world and it's right near the kenyan border with somalia. like 500,000 people now in that refugee camp and thousands of

somalis are pouring across the border to he escape the scorching heat. they have no food, no water, no shelter in somalia. so they are coming to kenya. aide agencies are saying it's really difficult to give them everything they need and it's also even tougher to get the food to somalia to help them out simply because of the instability and the fighting that has racked that country. it's such a difficult situation for people, kyra, because they are walking across the border. they can't afford the 40 dollar drive it takes to get from somalia to the refugee camp. it's put a lot of pressure on the kenyan government who aid agencies are akoosing of food-gragg dragging a little bit and kenyan government is saying they need to deal with the instability and security around the area first. but when you look at these images, it's a really difficult situation for hundreds of thousands of somalis and it could get worse, because the drought isn't expected to ease up any time soon.

>> zain verjee, thanks. is this a sign of the times? a road sign in north carolina hacked with a pretty controversial political message. we will have the details in cross-country. we're just minutes away from going live to london. rupert murdoch, head of news corp, under fire for the hacking scandal. set to appear before a parliamentary committee in 13 minutes. we will hear what rupert murdoch has to say, if anything, when we take you live to london for the grilling.

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downtowny hunter says he plans to sue for money that he spent searching for missing 2-year-old caylee anthony in 2008. he says he felt conned when the trail revealed or the trial revealed rather that anthony knew her daughter was dead all along. in north carolina, d.o.t. crews corrected an electronic road sign that was programmed with what some are calling a political message. over the weekend someone apparently hacked into the sign and changed it to read impeach obama. prove you can find almost everything at walmart. a south carolina couple claims to have found and image of jesus christ on a walmart receipt. they discovered it after coming home from church one sunday. minutes away from going live to london. rupert murdoch is under fire for the hacking scandal. set to appear before a parliamently committee 13 minutes from now. you know there have been arrests and resignations come not only his top executiving but high rathering police officials as well 37 we are waiting to hear

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but i did. they said i couldn't fight above my weight class. but i did. they said i couldn't get elected to congress. but i did. ♪ sometimes when we touch ha ha! millions of hits! [ male announcer ] flick, stack, and move between active apps seamlessly. only on the new hp touchpad with webos.

he is one of the world's most powerful media moguls. he is going face-to-face with the most powerful lawmakers in the uk. we are talking about rupert murdoch. he is going to face outraged members of the british parliament who want answers. we are talking about bribery,

hacking and corruption of power and like to hear over and over in today's hearing. let's put it in perspective with our jeffrey mccrackin who is a senior business writer with bloomberg news and "businessweek." something i didn't ask you the last time we talked as we started this hour, is just talking about murdoch's empire. we are talking about one of the richest men in the world. as you know, because your company has reported on this, so many lawsuits in the past that have been settled. millions of dollars out of murdoch's pockets have silenced, i guess we could say, many things, or a number of allegations that could have gotten bigger possibly to the point we are seeing now. is it possible he could go broke on this one? is that even possible to talk about the fact he could spend so

much money trying to fight this to the bitter end that he could lose all of his money? >> i don't think that's likely. i think that's beyond what could occur or what occurred here. he has lost or he and his family have lost, if you look at their holdings in news corp and you look at how the shares have tumbled the last two weeks, they have lost about a billion dollars in their network or value. i don't think you could see a situation where he and news corp lose all their money fighting off these suits. this is just one of those situations, i think, where every day, there is the drip, drip, drumbeat of news. given what he does and given the competition, my organization and "the new york times" and et cetera, et cetera, there will be an enormous amount of coverage and this will roll on for some time. what we don't know what will come come of the fbi investigations own what effect they will have or the department of justice here looking into the foreign corrupt practices act

and whether news corp bribed foreign officials and that could be a serious thing as well. to your point, i don't think rupert has to worry about living in the poor house in his later years. >> we are talking about a number of legal consequences here in the u.s., not just britain, which is, obviously, one of the main reasons why we are watching this so closely. >> right. exactly. a lot going on here. i think actually what is probably important to consider is the legal liabilities or the possibilities of lawsuits, the possibilities of millions and billions going out for settlements, that is weighing down -- that is weighing down his wealth in a big way because that weighs down the shares of his company. as you point out they spend hundreds of millions of dollars settling with other victims and alleged victims of alleged phone hackings and that is weighing down the company and it's also weighing down their ability to take tern steps. let's say they decided newspapers are 3% of our review

knews and causing 99% of our headaches and perhaps we should consider selling them and that would appease our critics but you can't get a lot for them when there is this overhang of liability, legal liability tied to each one of those properties and assets. >> jeffrey mccrackin, stay with us. rupert murdoch about to testify and we are going to take it live. a quick break and our live coverage continues. hitens. neutrogena® wet skin cuts through water. forms a broad spectrum barrier for full strength sun protection. wet skin. neutrogena®.

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we are going live to london where you are about to watch rupert murdoch basically get grilled by parliament there in london. a lot of questions about what has gone wrong within news corporation. we want to take you now for special coverage of this testimony. richard quest is live outside british parliament. richard, take it from here. ♪ ♪ snowe ♪ >> shame you on! shame on you! >> anger, frustration, and questions directed at rupert murdoch and his media empire. >> this was a schoolgirl, a 13-year-old girl who had gone missing. >> reporter: missing, then found murdered. a girl whose voice mail messages were hacked, then deleted. her family given hope she was

still alive. that hacker allegedly paid by one of murdoch's british newspapers. "the news of the world." 13-year-old mili dowler is one face, one victim. potentially amongst thousands. >> there is a firestorm, if you like that, is engulfing parts of the media, parts of the police, and, indeed, our political system's ability to respond. >> reporter: and drawing into question ties between the press, the companies that own them, and the government at the highest levels. >> he just doesn't get it. he just doesn't get it! >> reporter: bags of evidence left sitting in a basement for years. senior journalists from the newspaper now under investigation. those journalists were hired by both 10 downing street and scotland yard. those decisions taking their toll at the top.

>> i wish we had -- involvement in this affair differently. i didn't and that is that. >> reporter: rupert murdoch, his son james, and rebekah brooks, the chain of command over the tabloid embroiled by scandal for almost a decade. today, they are called before parliament. >> this isn't a man who doesn't mow what is going on. everybody is scared to death to do anything that he doesn't like so he's the spider in the middle of this web. >> yes, he did apologize many times. i don't think somebody could have held their hands -- head in their hands so many times and say they are they were sorry. >> reporter: an apology, even answers. it may not be enough. ♪ good afternoon to you!

it is just after 2:30 in the afternoon. 9:30 on the eastern seaboard. this is an important day in british history in the british parliamentary life and for the media industry, not only in the united kingdom but around the world. the day when rupert murdoch and his son and his former editor go before a parliamentary select committee to give evidence on a phone-hacking scandal that has simply mushroomed into corruption, bribery, and questions over who knew what. moments from now, the three are scheduled to give system to the ten members of britain's parliamentary select committee on culture, media and sport. the question to what extent did

those people know about or should have known about the cover-up in the wide phone-hacking at news international and "news of the world." these events are happening as we speaker. we are going to show you what is happening. rupert and james murdoch are in the committee room. we need to hear every moment of this. let us listen to when the chairman john witnessingham begins. >> our understanding was that we would be afforded the opportunity to make an opening statement. and we prepared on that basis. and we would like the opportunity to make that statement. would you allow us? >> the committee discussed that earlier. we feel we do have a lot of questions and we hope that all that you would wish to say will come out during the course of questioning.

if you feel that is not the case, then you can make a statement at the end. excuse me. could we not have that, please? >> in that case, we would also like to submit the statement in writing, if it pleases you. >> that would be perfectly acceptable. >> thank you, mr. chairman. >> could we please remove these people? >> anybody else, sir? anybody holding up a piece of paper? >> all right. after that brief interruption, we will begin.

good afternoon, everybody. this is a special meeting of the committee. it is a follow-up to the inquiry which the committee held in 2009 and press standards privacy and libel during which we took evidence on the extent of phone hacking which had taken place in the "news of the woshled." in our report last year, we stated that we thought it was inconceivable that only one reporter had been involved. in the last few weeks it has emerged not only has evidence come out which i think has vindicated the committee's conclusion but also abuses have been revealed which have angered and shocked the entire country. it's also clear that parliament has been misled. we are very conscious there is an ongoing police investigation and possible criminal proceedings to follow and this committee would not wish to jeopardize that. however, we are encouraged by the statements that have been made by all of the witnesses this afternoon that they wish to

cooperate with the committee and help us to establish the truth. so as our first witness this afternoon, can i welcome the chairman and chief executive officer of news corp, rupert murdoch. t and james murdoch. can i thank you for making yourselves available to the committee this afternoon. >> thank you, mr. chairman. we are more than prepared to. >> thank you. perhaps i might start with mr. james murdoch. you made a statement on the 7th of july in which you stated that the paper had made statements to parliament without being in the full possession of the facts and that was wrong. you essentially admitted that parliament had been misled in what we had been told. can you tell us to what extent we were misled and when you became aware of that? >> mr. chairman, thank you very much. i would like to say as well how sorry i am and how sorry we are

to particularly the victims of illegal voice mail interceptions and to their families. . it's a matter of great regret of mine, my father's, and everyone at news corporation and these are standards. these actions do not live up to the standards that our company aspires to everywhere around the world and it is our determination to both put things right, make sure these things don't happen again, and to be the company that i know we have always aspired to be. as for my comments, mr. chairman, and my statement, which i believe was around the closure of the news of the world newspaper -- >> before you get to that, i would just like to say -- >> this is the most humble day of my life. >> thank you. >> the statement around the closure of the "news of the world" newspaper where i stated that we -- the company had not

been in full possession of the facts which certain statements were made to this committee, was referring to the emergence of new facts. largely, that came about at the end of 2010 as the due process of a number of civil trials reached their point where document disclosure and evidence disclosure made it apparent to the company and to myself at that time, that, indeed, there were -- there was reason to believe that potentially more people had been involved in "news of the world" illegal voice mail interceptions from before. that was new evidence or new information at the time. that post-dated the 2009 hearings. that is what i was referring to. subsequent to our discovery of that information in one of the civil trials at the end of 2010, which i believe was the siana miller case, trial around voice mail interceptions, the company

immediately went to look at additional records around the individual involved. we alerted the company -- the company alerted the police who restarted on that basis, the investigation that is now under way. and since then, the company has admitted liability to victims of illegal voice mail interceptions, has apologized unreservedly, which i repeat today to those victims. and the company also set up a compensation scheme independently managed by a former high court judge to be able to deal with legitimate claims coming from victims of those terrible incidents of voice mail interceptions. and those are the actions that were taken as soon as the new evidence emerged. so when i made the statement about not being in the full possession of the facts, it was that those facts, at that point, were still in the future and it was in the due process of that civil trial or the civil litigation process that that

evidence really emerged for us and we acted and the company acted as swiftly as an transparentally as possible. >> when this committee took evidence in 2009, we heard from the managing editor of "news of the world," the legal manager of news corp and the former editor andy coulson and les hinton, a former executive of news of the world. no evidence had ever been found that anybody else was involved. but clearly it was not correct. were any of them lying to this committee? >> mr. chairman, the company relied on three things throughout -- for a period of time up until the new evidence emerged. the company relied on a police

investigation in 2007 and this is before -- i'll recount this to try to take us back to that area. this was before i was involved. i became back involved in news corporation and international matters at the end of 2007. in the twech peri2007 period, p investigation and successful prosecutions were brought against two people and editor of "news of the world" resigned. the company relied on both the police having closed the investigation and repeated assertions that there was no new evidence for them to reopen their investigation. the company relied on the pcc, which had had a report and had said that there was nothing more to this at the time. and the. relied on the legal opinion of outside counsel that was brought in related to those matters who, with respect to their review, had issued a clear opinion that there was no additional

illegality other than the two individuals involved before. the company relied on those facts and for the company in 2008 and 2009, it was not -- it was not clear that there was a reason to believe that those matters were anything other than settled matters and in the past. >> so is it your testimony to this committee that the end of the deals who gave us evidence in 2009, none of them knew at that time what had been going on? >> i do not have direct knowledge of what they knew and what time. but i can tell you that the critical new facts as i saw them and as the company saw them, really e merlged merged in the n of document information or evidence in civil trials at the end of 2010. and the duration from 2008 until -- or 2007, i should say, to the end of 2010, and the length of time it took for that

to come clear and for that real evidence to be there is a matter of deep frustration. mine, i have to tell you, i know an i sympathize are the frustration of this committee and it's a matter of real regret that the facts could not emerge and could not be gotten to -- to my understanding faster. >> well, you have made clear that it is the case that the information, when given, was incorrect. how do you establish who, as well as clyde goodman, was involved in phone hacking in "news of the world"? >> i'm sorry, could you repeat that, mr. chairman? >> who, as well as clyde goodman, was involved in hacking in "news of the world"? >> as i think you made it clear earlier, mr. chairman, there have been a number of arrests of former "news of the world" employees. these are matters for current criminal investigations and i think it's understandably it's difficult for me to comment in

particular around some of those individuals. >> have you carried out your own investigation since the discovery of this information, to find out the extent of involvement in phone hacking in the "news of the world"? >> we have established -- we have established a group in the company cooperating very closely with the police on their investigation. their investigation is broad with respect to journalistic practices and, in particular, journalistic practices at the "news of the world." and the policy specialty direction the company has given them is cooperate fully and transparentally with the police, to provide information and evidence, that the company believes and they believe is relevant to those investigations. sometimes, pro actively, sometimes in response to those requests. and, again, i think the very fact that the provision of the new information to the police in the first place when there was no police investigation ongoing,

that then led to, in part, the reopening of -- or this new information being established, i hope can be testament to some proactive action and transparency with respect to getting to the right place in terms of finding out the facts of what happened, understanding all of the allegations that a are -- that are being -- that are coming in. and moving forward to aid the police in a successful completion of the important and serious work that they are doing. >> okay. and the departure from your company in the recent few days of rebekah brooks and les hinton, is that because any of them are any foj knowledge of pho phone hacking? >> i have no knowledge and there is no evidence that i -- that i'm aware of, that mrs. brooks or mr. hinton, or any of those

executives had knowledge of that and their assertions, certainly mrs. brooks and assertions to me of her knowledge of those things has been -- has been clear. nonetheless, those resignations have been accepted. but it's important to know on the basis that there is no evidence today that i have seen or that i have any knowledge of, that there was any impriority by them. >> turn to tom watson. >> mr. murdoch sr., good afternoon, sir. you have repeatedly stated that news corp has a zero tolerance of wrongdoing by employees. is that right? >> yes. >> in october 2010, did you still believe it to be true when you made your speech and you said, let me be clear, we will be vig -- we will vigorously pursue the truth and we will not tolerate wrongdoing? >> yes. >> so if you were not lying

then, somebody lied to you, who was it? >> i don't know. that is what the police are investigating and we are helping them with. >> but you acknowledge that you were misled? >> clearly. >> can i take you back to 2003? are you aware that in march of that year, rebekah brooks gave evidence to this committee admitting paying police? >> i am now aware of that. i was not aware at the time. also aware that she amended that considerably very quickly afterwards. >> i think she amended it six or seven years afterwards. >> i'm sorry. >> did you or anyone else at your organization investigate this at the time? >> no. >> can you explain why? >> i didn't know of it. i'm sorry. i'm -- i -- i need to say something.

and this is not as an excuse. maybe it's an explanation of my laxity. the "news of the world" is less than 1% of our company. i employ 53,000 people around the world who are proud and great and and great and ethical and distinguished people, professionals. perhaps -- and i'm spread watching and appointing people in my trust to run the divisions. >> mr. murdoch, i do accept you have many distinguished people that work for your company. you're ultimately responsible for the corporate governance of news corp, so what i'm try to establish is who knew about wrongdoing and what was involved at the time. if i can take you forward to 2006, when clive goodman was arrested and subsequently

convicted of intercepting voice mails, were you made aware of that? >> i think so. obviously, i was made aware of it. >> what did international news do subsequent to get to the facts? >> we worked with the police on further investigation, and eventually we appointed, i think, very quickly appointed a very leading firm of lawyers in this city to investigate it further. >> wait a second. >> i'm come to you in a minute. let me finish my line of questioning, and i'll come to you. what did you personally do to investigate that after mr. goodman went to prison? you were, obviously, concerned about it. >> he told me about it. >> can i ask you in 2008, another two years, why did you

not dismiss "news of the world" chief reporter neville following the mosley case. >> i never heard of him. >> despite that he set out to blame two of the women involved? >> i didn't hear that. >> a judge made it clear that he set out to blackmail two of the women involved in the case. >> that's the first i've heard of that. >> so none of your uk staff drew your attention to this serious wrongdoing, even though the case received widespread media attention? >> i think my son had more detail. >> i'll come to your son in a minute. despite the fact that blackmail can result in a 14-year prison sentence, nobody in your uk company brought this fact to your attention? >> the blackmail charge, no. >> do you think that might be because they knew you would think nothing of it?

>> no. i can't answer. i don't know. >> do you agree with when he said the lack of action shows the state of affairs at news international? >> no. >> mr. murdoch, a judge found a chief reporter guilty of blackmail. it was widely reported. he says it was a remarkable status -- >> why didn't he put him in jail? >> because it was a civil case. were you aware that news international commissioned an investigation it to news international's e-mail by hyde, bartel and lewis. >> was i -- >> committed an investigation into the e-mails by the solicitor's if i remember? >> yes, i didn't poinl them, but i was told of it happening.

>> you claimed in the "wall street journal" that they had made a major mistake. can i ask what mistake you were referring to? >> i think maybe that's a question, again, for james, but there was certainly -- well, we examined it, re-examined that. we found things which we immediately went to counsel with to get advice on how to present it to the police. >> it in their written response to this committee's questions, are you aware that news international stated that both john chapman and daniel cloak reviewed these e-mails before forwarding them? >> no. >> so that nobody in the company told you that two of your executives had reviewed the

e-mails? >> i was under the understanding that everything had been sent to them. >> okay. you were aware that lord mcdonald has since reviewed the e-mails against on behalf of news international, are you not? >> he yes. >> you're aware that he stated he found evidence -- >> he's appointed to the board. >> he did. you were aware that he found evidence of indirect hacks, breaches of national security and evidence of serious crime in the file? >> we did, indeed. >> mr. watson, please, i can address these in some detail if you allow me. >> i will come to you, mr. murdoch, but it's your father who is responsible for corporate governance. i would like to ask what he knew. i will come back to you. who was aware of the findings at news international?

>> it went to the senior officials of news corp. certainly their top legal officer. >> so tom krone or les hinton? >> no, they were not the top legal officers. >> who were the top legal officers? >> mr. john chapman was the top legal and mr. krone was the head of legal affairs at news group newspapers. >> were you informed about the findings by your son, mr. murdoch, or by rebekah brooks? >> i forget, but i expect it was my son. i was in daily contact with them both. >> okay. when were you informed about the payments made to gordon taylor and max clifford?

>> no. >> you were not informed? >> no. >> at no point you knew that taylor and clifford were made payments? >> no. >> okay. >> you never informed the chief executives of news corp that you authorized payment of half a million dollars. >> can i answer the questions now, mr. watt stone? >> i'd like you to tell me whether you informed your father that you authorized payments to gordon taylor as a result of him being a victim of a crime? >> the settlement with mr. taylor -- i'm happy to address the matter of mr. taylor in some detail, if you would like -- >> first just let -- >> my father became aware after the settlement was made in 2009, i believe, after the confidential settlement had become public as a newspaper reported on the out of court settlement afterwards. but please understand that the settlement of an out of court settlement of a civil claim of

that nature and of that quantum is something that normally in a company our size the responsible executives in the territory in the country would be authorized to make. that's the way the company has functioned, and it's below the approval thresholds, if you will, that would have to go to my father as chairman and chief executive of the global company. >> there were other questions i can ask on this, but there are other colleagues that have specific questions of you, mr. murdoch, on this issue. i'll move back to your father. at what point did you find out that the criminality was indemmi indemmink "news of the world"? >> that's a wide-ranging word, and i also had to be extremely careful not to prejudice the course of justice, which is taking place now.

that has been disclosed. i became aware on those two, and then i was absolutely shocked, appalled, and ashamed when i heard about the millie dowler case only two weeks ago, eight days before i saw them and i was graciously received by the dowlers. >> did you read our last report into the matter where we referred to the collective amnesia of your executives that gave evidence to our committee? >> i haven't heard that. >> nobody brought it to your attention? >> so a parliamentary inquiry found your senior executives in the uk guilty of collective amnesia, and nobody brought it to your attention? i don't see why you think that's not very serious. >> no.

yes, but you're really not saying amnesia, you're really saying lying. >> well, we found our executives guilty of collective amnesia. i would have thought that someone would like to bring that to your attention, that it would concern you. did they forget? >> no. >> okay. well, it's been obvious to most of the observers from the summer of 2009 that phone hacking was widespread. you knew for sure in january of this year that the one rouge reporter line was false, is that right? >> i forget the date. >> why was edmundson the only person to leave "news of the world" last january? >> mr. watson, we have given all our files and all our knowledge

and everything to the police. they have not given us the diaries, so we do not know what was in that. there was a page which appeared to be addressed to him. this is my son's -- >> mr. chairman, perhaps it would be helpful to the committee if you would like to go tloo through any of the particular detail about why decisions were made by the team at news international, it would be more helpful perhaps if i could answer those questions as the chief executive of the regional businesses across europe. i have somewhat more proximity to it. >> i understand the detail points. >> i'm simples offering to help to clarify the matters. >> your father is responsible, and serious wrongdoing has been brought about in the company and it's revealing in itself what he

doesn't know and what executives chose not to tell him. i would resume my line of questioning and come back to you later. mr. murdoch, why was no one fired in april when news international finally admitted that "news of the world" had been engaged in criminal interception of voice mails? >> it was not our job to get in the course of justice. it was up to the police to bring those charges and to carry out their investigation, which we were 100% cooperating with. >> in april the company admitted liability for phone hacking, and nobody took responsibility for it then. no one was fired. the company admitted that they've been involved in criminal wrongdoing, and no one was fired. why was that? >> there were people in the company which apparently were guilty, and we have to find them and we have to deal with them

appropriately. >> mr. watson, if i can clarify, most of the individuals involved or implicated in the allegations there had long since left the company. some that were still there, you mentioned one exited the business as soon as evidence of wrongdoing was found and a process was set up in cooperation with the the police to aid them with any of those things that they wanted to do. but many of the individuals that were potentially implicated in those civility ga litigation an maerlts had left the building and were not at "the news of the world" at the time and the current journalists at the time, many of whom were not there in 2006 and '07, so it was -- some of them had already left. >> thank you. >> you're welcome. >> mr. murdoch, why did you decide to risk the jobs of 200 people before pointing the

approximate finger at those responsible for running the company at the time of the illegality, your son and rebekah broo brooks? >> when a company closes down, it's natural for people to lose their jobs. we have in this case and i'll make this continuing every effort to see those people are employed in other divisions of the company, if they're not part of the small group. i don't know how big the group is. whatever group was there involved in the criminality. >> did you close it because of the criminality? did you close the paper down because of the criminality? >> yes, we felt ashamed of what had happened, and we brought it to a close. >> people lied to you and lied to their readers. >> we had broken our trust with our readers certainly with me, but it was the important point

we broke our trust with the readers. >> are you aware there are other forms of illicit surveillance used by private investigators used by news international? >> other forms of? >> illicit surveillance, computer hacking, tracking your cars. if the evidence is produced -- >> i think all news organizations have used private detectives and do so in their investigations from time to time. i don't think illegally. >> if it can be shown to you the private investigators working for newspapers and news international used other forms of illicit surveillance like computer hacking, would you immediately introduce another investigation? >> that would be up to the police, but we would certainly work with the police. it if they wanted us to do it, we would do it. if they wanted to do it, thektd d do. >> finally, when did you first meet mr. alex marincheck?

he worked for the company for 25 years. >> i don't remember meeting him. i might have shaken hands with me walking into the office, but i don't have any memory. >> okay. thank you. approximate. >> thank you, jim chariton. >> again, mr. murdoch sr., can i ask you i have a number of short questions for you. why did you enter the back door at number 10 when you visited the prime minister following the last general election? >> because i was asked to. >> you were asked to go in the back door of number 10? >> yes. >> why would that be? >> to avoid photographers in the front, i imagine. i don't know. i just did what i was told. >> all right. it's strange that government heads of state managed to go in the front door. >> yes. >> yet, you have to go in the back door?

>> yes. that's the choice of the prime minister or their staff or whoever do these things. >> so it was under the prime minister's direct instructions that you come in the back door? >> i was asked would i please come in through the back door. >> i don't think my father would have any direct knowledge of the arrangements being made for his entry or exit from a particular building respectfully. >> have you ever imposed any preconditions -- >> which visit to downing street are you talking about? >> it was just following the last general election. >> i was invited within days to have a cup of tea to be thanked for the support by mr. cameron. no other conversation took place. it lasted minutes. >> and that's the one where you went in through the back door? >> yes. i had been out also by mr. brown many times. >> through the back door?

>> yes. >> can i also ask you, mr. murdoch -- >> and my family who went there many times. >> have you ever imposed any preconditions upon a party leader in the uk before giving them the support of your newspapers? >> i've never guaranteed anyone the support of my newspapers. we changed -- we had been supporting the thatcher government and the conservative government that followed. we thought it got tired, and we changed and supported the labor party whenever it was, 18 years ago, with the direct loss of 200,000 circulation. >> did you ever impose any preconditions on either the labor party? >> no. >> no preconditions whatsoever? >> no. the only conversation i had with th them, with mr. blair that i can remember arguing about the euro. >> mr. blair visited you halfway

around the world? >> he what? >> mr. blair visited you halfway around the world before the 1997 election. anyway, that doesn't matter. >> that was what mr. campbell arranged. >> i'll also ask you it's understood that the fbi are investigating 9/11 victims. have you commissioned an investigation into these allegations? >> we have seen no evidence of that at all, and as far as we know, the fbi hasn't either. if they do, we will treat it exactly the same way as we treated it here, and i cannot believe it happened from anyone in america, whether it's someone at "news of the world," i don't know. it's certainly unnecessary. >> if i can go -- i'll come back to you, james, in a moment. i just wanted to clarify. if these allegations are any way

true whatsoever, will you commission an investigation into them? >> absolutely. >> okay. also, you must be horrified by the scandal and the fact that it's cost you the transaction and led to the closure of "the news of the world." who do you blame for that? >> well, a lot of people had different agendas, i think, in trying to built this hysteria. all our competitors in this country formally announced a consortium to try and stop us. they caught us with dirty hands, and they built hysteria around it. >> was it competitors that stopped you getting -- >> no. i think a mood developed which made it really impractical to go ahead. >> mr. sheridan we've been very clear that serious allegations

of wrongdoing have been leveled about "news of the world," and we believed that "the news of the world," the actions of some reporters and people some years ago have fundamentally tarnished the trust "the news of the world" had with its readers. this is a matter of huge and sincere regret. mine, my father's, and the company's. the company's priority very much so is to restore that trust, is it to operate in the right way. it's to make sure that the company can be the company that it's always aspired to be. the removal of the offer to make pay proposed -- the proposal to make an offer to the shareholders who are not news corporation is simply a reflection of that priority of moving forward. >> i have every sympathy with what you're saying, but do you

understand that people that have been the victims of "the news of the world" based on allegations were found out by strangers? >> it is our absolute priority to -- with those -- what happened at "the news of the world" was wrong. we and i have apologized profusely and unreservedly for that, and my father has as well. these are very, very serious matters, and we are trying to establish the facts of any new allegations as they come up. we are working closely with the police to find out where the wrongdoing was and to hold people accountable, and i think importantly as well to the victims of illegal voice mail interceptions, not just if we apologize but we have admitted liability. the company has admitted liability, and we have set out the appropriate third-party compensation schemes to do that.

these are all matters that we're fully engaged in. >> i know it's very stressful for yourselves, but mr. murdoch, do you accept that ultimately you are responsible for this whole fiasco? >> no. >> you're not responsible? who is responsible? >> the people that i trusted to run, and then maybe the people that they trusted. >> can you name -- >> i worked with mr. hinton for 52 years, and i would trust him with my life. >> are you satisfied that the cash payments that were made by the news corporation companies to informants for stories were registered with the appropriate tax authorities? >> i don't know anything about that. >> if people were given money in order to accomplish stories -- >> if they were given money to -- >> in order to get stories, was

that -- did you notify the appropriate tax authorities about this? >> all of our financial affairs are as a public company are transparent, are audited. the tax jurisdictions that the company works with all around the world are worked with transparently and thoroughly. tax compliance is an important priority for any business, and the company complies with the laws. >> would that include people who are in regular monthly retainers registered in their affairs? >> i can't speak -- i have no knowledge of separate people on retainers in the company and their own tax affairs or their own tax arrangements. i can speak for the companies' tax arrangements, and to the best of my knowledge we are a company that takes tax compliance, regulatory compliance, financial and regulatory transparency hugely

seriously, and it's something we're very proud of. >> we'll talk about these in more details. >> can i just talk to james. you're aware of the stwags with tommy sheridan, the former msp who is currently in prison. both misled the jury in the perjury trial. your company has not disclosed international e-mails that may aid the appeal of mr. sheridan. s why why is that? >> i don't have direct knowledge of that, mr. sheridan. i apologize. if you have additional questions on that in the future, i'm happy to supply written answers, but i don't have direct knowledge and i'm not in a position to answer those questions. >> just a couple more questions. james, could you please confirm or deny whether any news corporation company is the subject of an investigation ? >> i have no knowledge of that.

i have no knowledge of that at this point. >> could you also confirm or deny whether or not any news corporation company is the subject of an investigation by the financial services authority? >> i don't believe so, but not to my knowledge. >> finally, please confirm or deny whether any news corporation company is the subject of an investigation? >> not to my knowledge. we have ongoing dialogue with the hric and the various subsidiaries here. as far as investigations are concerned, i have no knowledge of one. >> thank you. >> thank you. mr. murdoch, to made the recommendation to close down "the news of the world" to news corporation? >> who? >> who made the recommendation to close down the news of the world? i assume it was a board decision made by news corp? >> it was the result of a discussion between my son and i and senior executives and miss

brooks one morning. we called the board of news corporation, the whole board to seek their agreement. >> you've already suggested it's because you felt ashamed. there's not a suggestion it was a commercial decision to decide to close "the news of the world"? >> far from it. >> okay. moving on to that. moving on to the financial government arrangements with the news corporation, mr. james murdoch, you suggested earlier that the payments to mr. taylor were not notified at news corp level because of the finance threshold. could you tell us a bit more about that. i understand it took your -- you had to agree for the payment to mr. taylor. was that financial level a managerial decision? >> i'm very happy to discuss. thank you. it's a good question. i'm very happy to discuss the matter of mr. taylor. the out of court settlement with mr. taylor was related to a voice mail interception that had

occurred previously and was actually one of the counts as i understand it of the 2007 trial. it's important to think back to 2008 to understand what we knew then, what i knew then, and what the information was in the context. it was the underlying interception was not a disputed fact. secondly, it was the advice and further to that i should say it was the advice and the clear view of the company that if litigated the company would lose that case. it was almost certain to lose that case because the underlying fact was not in dispute. thirdly, the company sought distinguished outside counsel to understand if the case were litigated and if it were to be lost, which was the great likelihood, what the financial quantum would be or what that would cost the company. it was advised that with expenses, legal expenses and damages that that could be between 500,000 and a million

pounds or thereabouts. i don't recall the exact number of the advice. i think it was 250,000 plus expenses and litigation costs, something like that. lastly, this was in a context in the first half of 2008, and this was my first real involvement with any of these issues where there was no reason at the time to believe that the issue of these voice mail interceptions was anything but a settled matter and that it was in the past after the successful prosecution of the two individuals we discussed as well as the resignation of the editor. so the settlement, the out of court settlement was made in that context. it was within the -- it was within the authorities as i understand it -- as i understood it of news international to be able to make those out of court settlements in due course without going to the global

level company. i at the time was the regional head for europe and asia of news corporation. i directed that it was already to settle that but did not get involved in any of the negotiations directly about that settlement, but i do recall in 2008 that those are the things that were done. >> may i just add that my son had only been with the company for a matter of a very few weeks. >> it was a few months. i'd come back to the company at the end of 2007 in the middle of december, and this was sometime -- i don't recall the exact day. sometime in the first half of 2008. >> so given you were new to the company, six months, i don't want to have a father/son argument about that, what level of financial payments could other news international sanction people without recourse to you as the chairman?

>> generally speaking, the way the company -- the way the company will operate, as any company will operate s-within certainly financial par meters from a financial planning perspective, we look at a budget like a house will manage its bugts to say how much money do we have to spend or how much money does part of the company or department have to spend. as long as they stay within those guidelines the belief is that they should be empowered to make those judgments to spend those monies and achieve the ends that they can. >> i'm sorry. >> i don't have the tip of my fingers the precise financial authorities in that, but i can discuss after the committee hearing with you what exactly you'd like to know, and we can discuss whether or not it's right to, you know, come back to you with that. >> what would it have taken -- what level of financial payout

would it have taken to require an authorization if from the board of news corp? >> i think that for the full board it's in the millions, but i don't know the exact answer there. >> do you know how much has been paid out to people authorized by your executives? >> paid out in what way? >> paid out of settlements. >> settlements -- legal settlements? i do not know the total number. i do not know the total number. around the world it's customary to reach out of court settlements in civility gagss and civil matters, and it's something that rather than go through the lengthy and sometimes expensive litigation process with the risk that that often entails, it's customary to try to reach out of court settlements in many cases. >> let me say we have a very strong committee at news corporation, which would know about this and they're members of the outside directors and they review all these things.

>> thank you. building on that, then, how is it possible to make payments to people if they don't invoice you or not an employee of news corp's subsidiaries? >> i'm sorry. >> how is it possible to transfer cash or some other form of remuneration to people who don't invoice you or who are not employees of news corp subsidiaries? >> i don't know the exact arrangement of that. don't do that myself. but to tell you how that's done, but sometimes in certain instances, you know, it is appropriate for journalists or managers in a certain environment to have the ability to use cash in some instances, but it is customary for them to record those and all of the expenses, cash expenses as well as invoice expenses should be looked at and recorded. >> so things like use of petty

cash could be quite big sums of money or small? at the moment you just record that the journalist gave it to somebody? >> and to be -- and i don't have direct knowledge of all of those arrangements. >> thank you. i was going to ask if payment is going to be made to family members to those who have been alleged to have been hacked. is it possible other forms of remuneration can be used in your company talking about things like travel checks, vouchers things redeemed for cash? >> i don't have knowledge of that. >> just looking at some of your corporate governance at page 2 and page 4 of your own code, it talks about directors, employees, and officers of news corporation acting to the principles set forth. including consultants, agents, supplies and business partners to adhere to the standards. we'd never act the third-party to formally act, it would invite these standards. can you tell me how as an organization you try to make

that happen? >> how that would work is each newspaper has an editorial manag manager, but they have to approve the expensive claims of every reporter. the reporter has no authority to pay money on his own. >> so the managing editor's office often manages a lot of the expenses and budgets and should do so when is directed to do so with proprietary. >> do you require your executives to make annual statements that they abided with the code of ethics? >> every employee, every colleague around the world of news corporation receives the code of conduct, a set of -- it's a pamphlet that has some

detail in it, but it's not too much so that people read it. with respect to what ethical conduct is required -- >> we can make it available to you. >> very happy to make it available to you. it's about ethical conduct, the laws, breaking the rules and so on, and everyone who becomes an employee is required to do that. our legal counsel internally also conducts workshops around the world with staff from mumbai to manchester around those rules and that code of conduct. it's something that we try very hard to communicate as crisply as we can to everyone in the business. >> finally, and i appreciate mr. murdoch's statements at the beginning, given you've been in the media spotlight and perhaps not appreciated the attention you've had, without wishing to suppress investigative journalism, will this make you

think again about how you approach your headlines and targets a targets in the future? will you think again about what your headlines will say in the future? >> i think all our editors certainly will, and i'm not aware of any transgressions as a matter of taste, it's a very difficult issue we have in this country, a wonderful variety of voices and they're naturally very competitive. i'm sure there are headlines which occasionally give offense, but it's not intentional. >> mr. james murdoch. >> i think it's important to say one of the lessons, if you will, from all of this for us is that we do need to think, i think, as

a business as well as an industry in this country more forcefully and more thoughtfully about our journalistic ethics about what exactly the codes of conduct should be not just for news international, our uk publishing subsidiary, but also for the industrial as a whole. what sort of governance should be around this whole area, and we welcomed last week the prime minister's announcement of a judicial inquiry into both journalistic ethics but also relationships as i understand it with the police and with politicians and things like that. i think that's a really good thing for the country and for all of the interested parties to engage with fully. one of the specific actions that we've taken to try to be as proactive as we can around this is we've actually set up something that we call a management and standards committee that is outside of the actual management of our publishing company and reports

to the independent directors through the independent directors of our global public board precisely to look at this issue around, first, the specific issues, how we cooperate with the investigations, how we deal with allegations of wrongdoing and get to the bottom of it. but also and i think importantly how we coordinate and cooperate and really proactively engage with those judicial inquiries and how we start to set a code of conduct and a code of ethics that we think and that it thinks is something that can both be a paragon for all of our newspapers and the industry but also something that really has teeth and can hold the company to account. it's independently chaired, this management and standards committee, and we think it's going to be a much better way to go in the future. we'd like over the next six months and year and years to be

judged on the actions that the company takes to put that right and to put that in place. >> thank you. >> i would like to say, if i may, that it doesn't take away at from what weave been saying about our apologies or blame for anything. this country does greatly benefit from having a competitive press, and dlfr having a very transparent society. that is sometimes very inconvenient to people. i think we're better and stronger for it. >> before i bring in my next colleague, can i come back to something that was raised which was the closing of the ne"the n the world". is it your intention to launch a new tabloid newspaper? >> there's no decision on that. >> for the moment there are no plans to have a news international title coming out on sunday at the tabloid end of

the market? >> there are no immediate plans for that. >> so speculation -- we've talked in the past about moving to seven-day newsrooms or speculation for the title on sunday being reserved. >> i think we leave all those options open. that is not the company's priority now. in the last week it has come up in the company, but, you know, my father's direction and my direction is this is not the time to be worrying about that. the company has to move forward on all of these other actions and really get to grips with the facts of these allegations and understand them as fully as we can. >> okay. can i appeal both to the witnesses and indeed to members to try and keep brief because we still have quite a lot to get there. adrian sanders. >> good afternoon. in your statement the 7th of july, 2011, to james murdoch,

you said that the company paid out of court settlements approved by me. i did not have a complete picture when i did so. what do you know now that you did not know then? >> i think essentially the new information that emerged that is critical here is the information that came out of the ongoing process of civili litigations i 2010, and at the end of the 2010 the presentation of evidence, which had not been in our possession previously from this civil litigation, that widened the circle definitively or made it it very apparent it was very likely that the circle was wider than the two individuals, mr. goodman and mr. mulkare, from previously. it was that information that was critical. if i can go back to my previous

testimony just earlier today around the settlement with mr. taylor, the commercial and legal rationality around that settlement was very, very clear, which was that this underlying fact was not in dispute and was a known fact from a previous trial. the advice was very, very clear as to what sort of damages could be expected to be paid, and it was quite xleclear and likely i litigated the company would lose that case. in the context of none of this other information -- this is a full year before some of the new allegations in the press arose from afar, so this is a -- there was no reason to believe at the time that it was anything other than in the past. so knowing then what i know now, would i have still directed to negotiate to settle that case? i would, actually. i would have coupled it with the

other actions we've taken since the new evidence emerged at the end of september 2010. that is to immediately go and look at -- whatever we could find internally around the individuals involved to immediately contact the police about what they -- about information that may be of great interest to them. to put in place the system -- the process which took uple a little while and we did it in the early part of 2011 around admitting liability to the civil litigants and putting a process in place to get to the bottom of what legitimate allegations there were, apologizing unreservedly to the victims of those illegal voice mail intercepts which were absolutely inexcusable and having a system of compensation there. so i think if i knew then what we know now and that the benefit

of hindsight, we can look at all these things, but if i knew then what i know now we would have taken more action around that and move faster to get to the bottom of the allegations. >> were the settlements paid by news corp or news group newspapers? >> i don't recall. i would imagine it was either news international or news group newspapers, i think news group newspapers. i'm sure we can provide you with that information. >> what advice did tom krone and thomas give you? >> the advice was as i sdpribed it, which was that the underlying fact in the case was known it was a previous fact in the trial of mr. mulcare. >> were you aware it involved the criminal act of phone hacking? >> pardon me, sir? >> were you aware the case involved the criminal act of phone hacking?

>> that was my understanding, that that was what the litigation was for damages for the illegal voice mail interception. >> when did you get this advice? >> this was in the first half of 2008. >> in 2009 mr. krone and mr mr. milar said they decided to settle the claim based on the advice from the company's external legal advisers. which advice received from farrah and co? >> they have done business with us. i don't know what they engaged on that. >> did you see the advice, whether it was from farin and co or anybody else? >> it was oral advice. >> it was as i described it. >> simply to settle? >> and that outside legal advice had been taken with respect to the quantum of damages that were

expected. that their advice was that the case would be lost, and that their advice was that the -- in the absence of any new evidence certainly no new evidence was made aware to me. in the absence of any new evidence from this, this was simply a matter that was to do with events that had come to the light in 2007 in the criminal trials before and before i was there, and that this was a matter in the past. and the police as well had closed their case and said there was no new evidence here. the context of it was it was about events that were a year or more old for underlying activities prior to that. that's where we were. >> was the advice given that the high payment would ensure the matter was kept confidential? >> no, not at all. the confidential nature of an out of court settlement is a normal thing. i don't know of any many out of court settlements that are not kept confidential. there are some i'm sure, so

there was nothing about confidentiality. i think i understand where you're going with this, mr. sanders, but no. the amount paid and the advice there was on resting on advice from outside counsel with respect to the amount that we would be expected to pay in damages plus expenses in litigation costs. >> did you question why such high payments were made to mr. taylor and to mr. clifford? it suggested to be 700,000 pounds and a million respectively for invasions of privacy when the record amount of privacy damages awarded by a court remains 60,000 pounds ironically against "the news of the world"? >> mr. sanders, i did question the amount made, but not in relation to the 60,000. if you recall, and i'm sure you do, the chronology here. the settlement made with respect to the 60,000 pounds against "the news of the world" which i believe was the moseley case was

after the authorization of the settlement and after the advice we sought from senior distinguished outside counsel with respect to the quantum of damages we could be expected to pay which in damage materials was quarter of million pounds plus expenses and litigation costs was between 500 it,000 is my recollection of it. i think that chronology is important. i think afterwards you would have had maybe different information, but it wasn't afterwards. it was before. >> you have since said that when you approved the taylor settlement, you did not actually have all the facts. what do you know then that you did not know then? >> as i've testified, mr. sanders, and respectfully mr. chairman, the key facts, the key evidence that came to light at the end of 2010 as the the lengthy due process of civility gagss involving these matters took their course. it was that process that unearthed the key evidence there, and it was really only

after that even that the police, that any said, you know, they should restart the investigation. as soon as we had that new information at the end of 2010, which indicated to us that there was a wider involvement, we acted on it immediately. >> tom krone said last week he did not know why he left news group newspapers. can you clarify why he was asked to leave after 26 years after service? >> well, last week "the news of the world" -- two weeks ago, i guess, "the news of the world" published its last newspaper. he was very involved with the news matters over the years, but the company believed and the management of the company believed that it was time to part ways. i was not involved in those direct discussions with mr. krone. i can't comment on their nature or their content. i don't have knowledge of them. >> final couple of questions. the new statesman carries a

story last week that news corporation sub sid dieses andy's wages after he left your employ. can you shed any light on that? >> i have no knowledge of the wages after he left the company's employment. >> and finally, are you familiar with the term "willful blindness"? >> mr. sanders, would you care to elaborate? >> it is a term that came up in the enron scandal, willful blindness is a legal term. it states that if there is knowledge that you could have had and should have had but chose not to have, you are still responsible. >> mr. sanders, do you have a question? i don't know what you -- >> the question was whether you're aware -- >> i'm not aware of that particular phrase. >> now you are familiar with it, because i explained it to you. thank you, mr. chairman. >> thank you, mr. sanders.

>> we were not ever guilty of that. >> thank you. philip davis. >> as you -- i'm not sure if you acknowledged it or not but the chairman did. when we had our inquiry in 2009, the evidence given by news international executives was rather hopeless, really. they came with a game plan. their game plan was to tell them that they didn't know anything, they couldn't remember anything, and they didn't know anybody who would know anything. i just wondered so we can get off on a reasonable footing what sort of coaches you've had today, and whose advice you had to handle this session and what their advice was? >> with respect to today, after scheduling this appearance, we took -- we took some advice around what the context of this sort of setting is. it's my first time and my

father's first time in a committee meeting like this. mostly logistics and so on, what sort of questions to be asked. we were advised fundamentally to tell the truth, and to come and be as open and transparent as possible. my father's intent and intention, and we hope that we can show you that that's what's happening. >> okay. mr. murdoch sr., you in answer to some questions mr. watson seem to indicate that you had a rather hands-off approach to your company, but i think the point you made was that "news of the world" was less than 1% of your entire worldwide business, so you wouldn't be expected to know the ins and outs of what was going on. could you just give us an illustration of how many times -- how often you would speak to the editor of your newspapers, how often you speak to the editor of the sun, for example, how often you speak to the editor of "news of the

world." >> very seldom. sometimes i would talk to the editor of "news of the world" on saturday night. it was just to keep in touch. i read the sunday times nearly every saturday. not to influence what he has to say at all. i'm very careful to premise any remark i made to him saying i was just inquiring, and i'm not really in touch. i'm going to tell you that i've -- if there's anything i've had the most trouble with is the "wall street journal," because i'm in the same building. to say that we're hands off is wrong. i work a 10 or 12-hour day, and

i can't tell you the multitude of issues that i have to handle every day. "news of the world" perhaps i lost sight of, maybe because it was so small in the general frame of our company. we're doing a lot of other things, too. >> if i can help you out here, if somebody had told me that you would speak to something like the editor of "the sun" at least daily or at least twice a day, would you recognize that description or would nthat be - >> no. >> you wouldn't have spoken to the editor of the sun that number of times? >> no. i'd like to, but no. >> so when you come in, you said you speak to the editor of "the news of the world" made on a sunday night, absolutely understand that.

so i just am intrigued as to how these conversations go. i would imagine it would go something along the lines of to the editor of "the news of the world" of anything to report, anything interesting going on. the editor of "the news of the world" says no, no. we've had a standard week. we paid gordon taylor 600,000 pounds. surely -- >> he never said that last sentence. >> surely in your weekly conversations with the editor of "the news of the world," something as big as that, paying somebody a million pounds, 700,000 pounds, surely you would have expected the editor of "the news of the world" to drop it in at some point? you wouldn't have expected them to say that? >> i didn't call weekly, but at least once a month, i guess. >> what would you discuss with them? >> i'd say, what's doing? >> and what sort of response

would you get? >> he might say we have a great story exposing x or y. or he'd say well nothing special. >> thank you. james, would you -- >> he might refer to the fact that there are how many extra pages because of the football that week. >> he wouldn't tell you about a million pound pay off? >> no. >> it's interesting to someone like me. >> it would have been other people to tell me that. >> james would you acknowledge you overpaid max clifford and gordon taylor? >> i can't speak to the arrangements with mr. clifford. i was not -- i don't have direct knowledge in terms of i wasn't involved in those pieces and that piece. with respect to the taylor piece, i made a judgment given the advice of counsel, given the advice of the executives

involved that -- and going back and looking at what we knew in 2008 and looking at that advice, remembering that advice, and looking at the context of the time if we step back those few years now. you know, it was a decision that given that context was a decision that i would still stand by, i think. >> it just seems a bit -- >> certainly irng the -- >> all right, mr. davis. >> apparently there was a contract with mr. clifford, which was canceled by mr. coulson. >> i don't know about that. i don't have knowledge of that. mr. davis, you were going on. >> it just seems strange to me that -- >> i don't know what was in the context. >> we might ask you to come back to it. we might ask you to come back with details about that. it it seems odd to me as a

lehman th-- layman that 600,000o a million pounds, and andy gray got his phone hacked and didn't get anything. he got 20,000. it seems bizarre that somebody can have their phone hacked and get 20,000, and somebody else gets their phone hacked and they get 600,000 or a million. surely you can see that the difference that most people draw is the one was when it was all out in the open and everybody knew about all of these things, andy gray, and the other one was paid when it was all trying to be kept rather quiet, 600,000. do you not see that to most people looking at that it sort of smells a bit? >> mr. davies, i understand where you're coming from. these are big sums of money we're talking about. 100,000, 200,000, 600,000. that's a lot of money, and you look at that and say why would a company -- why would a company

do that? i would go back to my answer to mr. sanders' question, which was just to be precise about the chronology here. i'm not a lawyer. i apologize, but my understanding -- mr. davis i'd like to answer this question, but my understanding is that the 60,000 settlement in the judgment in the moseley case, which was after the advice given around the gordon taylor settlement, is an important chronology. that's set, and courts and judges have set a different, you know, standard here. what we knew and what i knew at the time was that we had senior distinguished outside counsel who we had gone to to say if this case was litigated and if we were to lose the case what sort of damages would we expect to pay? and the company received an answer that was substantial.

>> the answer was 250,000, so you settled for 600? >> mr. davis, it's important to be clear. i apologize. it's important to be clear the 600,000 or 700,000 included damages, legal fees, and an estimation of what it would have cost otherwise, because the other side of the negotiation understands it. so it's damages plus costs that gets you to that number, and it's important -- respectfully it's important to be clear about that. i agree. they're big numbers. >> i want to concentrate what you paid to the staff. going back to the try of clive goodman, clive goodman was pleading guilty to phone hacking, a criminal offense. did news international pay clive goodman's legal fees for his trial? >> i was not -- i do want to be clear about the chronology, first of all. i did not have firsthand

knowledge of those times. remember that my involvement is matters -- it it started in 2008, and in 2007 at the beginning of december i was wholly focused in my role as chief executive of a public company, and i wasn't involved in those things. >> who would know? >> i can try to answer the first question first to say that it is customary in certain instances with employees or with other -- with litigations to pay some set of legal expenses on behalf of those to try to bring all of the evidence to a court and so on. that's all been done in accordance with -- since any involvement that i've had knowledge of this in accordance with legal advice about what the proper way to do things was, but i can't speak to the 2007 arrangements. i don't have firsthand knowledge of those. >> i'll try to help out. clive goodman employed the services of a qc called john

kelgy frank. i don't know if you've come across john kelsey fry. he's probably one of the most eminent lawyers in the country, certainly one of the most sensitive and he's the go-to lawyer for celebrities. it seems odd to me that a journalist on "the news of the world" pleading guilty to the crime using in litigation probably the most expensive lawyer in the country, which leads most people to suspect his legal fees were not paid for by himself but were being paid for by news international. now, given that he was pleading guilty to a criminal act, phone hacking, which leads to dismissal, gross misconduct, why on earth would news international even think about, even dream about paying the legal fees of somebody engaged

in criminal activity and committed something that was clearly gross misconduct? >> mr. davis, i don't have any direct knowledge of the specific legal arrangements with mr. goodman in 2007, so i cannot answer the specifics of that question. what i can say is because i've asked the question as well more recently than that with respect to who the company pays legal fees, what contributions to legal fees do we make, does the company make and so on and so forth. i think i can tell you that in asking the question, i have been surprised that -- this is legal counsel telling me this. it is customary in here to sometimes make contributions to the legal costs of either co-defendants or defendants in related matters and so on and so forth. i have no direct knowledge of that particular instance that you mentioned, and approximaif

any additional specific questions about that, perhaps mr. chairman we can follow-up with you on that. i'm happy to do that. >> it's all overwhelming. these are issues that go back sometime, i'm surprised you haven't followed upon them already. were any payments made after their conviction? did news international make any payments at all to those two people following their convictions? >> i'd like to answer that question. i think it's a good question, and it's a specific question. to my knowledge, upon asking, because there were allegations made that legal fees had been paid after those, after that time in 2007 to those. i asked the question myself, and i was very surprised to find that the company had made certain contributions to legal settlements. i don't have all of the details around each of those -- not legal settlements but fees around there. i just, you know -- i was surprised. i was very surprised to find out that that had occurred.

>> who authorized them? >> they were done as i understand it it in accordance with legal counsel and the advice -- >> who at news international signed the checks? who agreed to make those payments? >> i do not know who signed off. >> you know -- you talked about the managing editor. would you expect the managing editor to make that decision? >> it would have been the management of the legal cases, i would think, but i think we have to, you know -- i'm happy to go back and look at that, but it was not something that came to my attention. >> who would have made that decision? >> i would like to say that certainly would not come before or having to do with the managing editors. >> he wouldn't. would it have been above the managing editor or above? >> it would have been above. >> this would have been on legal advice, payments on how to handle litigations, and again, i

don't have direct knowledge or details on the current status of those, but i can tell you i was as surprised as you are to find that some of those arrangements had been made. >> mr. murdoch sr., i seem to be getting further with you, for which i'm grateful. would it have been les hinton? >> it could have been. >> would have been or could have been? >> could have been. >> who else could it have been? >> the chief legal officer. >> right. >> signing checks for approval? >> both. >> signing checks, but it would be on the instructions of the chief legal officer. >> james, you said that you weren't involved in the decision to get rid of tom krone. whose decision was that? >> the management of the company at the time recently the chief executive, mrs. brooks. >> it was her decision?

>> she's the chief executive of the company, and senior level decisions are made by them. >> when he left the company allegations were made in the guardian originally about phone hacks. was that linked? did he resign? was he sacked? what happened to stewart? how did he leave the company? >> that, i don't know. that would have been for -- that would have been at the time a "news of the world" matter for them. >> or for you. you're free to ask him. >> why did les hinton resign? >> les hinton resigned sadly last friday following the rebekah brooks' resignation and saying i was in charge of the company during this period that we're under criticism for.

he said i feel i must step down. >> were either rebekah brooks or les hinton asked to leave, or did they ask to leave? >> they both asked to leave. >> why did you not accept rebekah brooks' resignation when she first offered it? >> because i believed her and trusted her and i do trust her. >> why did you anticipate it the second time, then? >> she just insisted. she was at a point of extreme anguish. >> can you tell us how much all of these characters have been paid off? how much have they been given as a financial settlement on their departure from news international? >> no, i can't tell you. in the case of mr. hinton, it will certainly be considerable because of pensions for 52 years of service. >> 10